Outlook: The City is surely not that Green over M&S

HAS IT really come to this? Only a few short earth years ago, Marks & Spencer used habitually to be described as the doyen of British retailing, if not British business in general. That's not where the superlatives stopped either - most admired company, best run, most profitable, best employer; you name it, M&S had received a prize for it.

It is hard to imagine a more dramatic fall from grace, or a swifter one. So bad have things become that M&S was this weekend being seen by some as a legitimate and realistic target even for business scavengers like Philip Green. Boy, how this rag- trade buccaneer must be loving it.

It wasn't so many years ago that he was drummed out of the City with his tail between his legs, the institutions complaining darkly about his autocratic ways. The feeling was mutual. The City regarded him as a spiv. He regarded the City as stuck up and stifling. Yet within a few years he was back, forcing the stuffed shirts to accept a humiliating, rock- bottom bid for Sears. Could the same fate really be about to befall M&S?

In these markets, it would be foolish to rule it out entirely, but on balance the answer has to be no. With Sears, the City was desperate. The company was a walking disaster, a rag-bag of half-forgotten, poorly performing brands. Its management didn't even have the wherewithal to know how to break it up effectively. Whatever else M&S has become, it is not yet that, nor is it a company that would easily lend itself to Mr Green's own particular style of asset stripping butchery.

It's hard to remember, to be sure, but up until the last 18 calamitous months, M&S had recorded 10 years of uninterrupted growth, eventually achieving peak profits of pounds 1bn. The old girl has plainly fallen on hard times, but nobody is going to give up such a one time gold mine lightly, however fast the Internet is changing the world we live in. There are plenty of well known retailing names about which this could not be said. Nobody cares a damn about what happens to Storehouse or Arcadia, for instance. No company has a god -given right to exist, but there is a vast amount of wealth and hope invested in M&S, and if any plc can properly be described as a national asset, this has to be one of them.

Mr Green is a break-up artist. There's no obvious breakup value in M&S, whose main asset is still its brand. Anyone who takes on M&S needs to have a clear and convincing strategy for turning it around and making it the clothes retailer of choice once more. Mr Green is a man of great energy and chutzpah, but building big businesses for the long term is not his priority. The City is simply not going to accept the necessarily low ball bid of a bargain hunter.

So if Philip Green does muster the fire power to bid, his position is likely to be only that of stalking horse for others. In such circumstances, Tesco, with a proven track record of brand creation and development, would be prevailed upon to engineer a merger capable of giving institutional investors an ongoing stake in whatever revival in M&S's fortunes is still possible. Catching a falling sword is a dangerous business, however, and for the moment Terry Leahy, chief executive of Tesco, remains understandably reluctant.